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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Bulkowski's Triple Bottoms

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Busted
Patterns
Candles Chart
Patterns
Event
Patterns
Small Patterns
Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 11/22/2017
23,526 -64.65 -0.3%
9,627 11.94 0.1%
758 -0.24 0.0%
6,867 4.88 0.1%
2,597 -1.95 -0.1%
YTD
19.0%
6.4%
14.9%
27.6%
16.0%
Tom's Targets    Overview: 11/14/2017
23,700 or 22,800 by 12/01/2017
9,300 or 9,800 by 12/01/2017
800 or 750 by 12/01/2017
7,000 or 6,500 by 12/01/2017
2,625 or 2,540 by 12/01/2017

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Triple Bottoms: Summary

Triple bottoms are somewhat rare chart patterns. That makes sense because three peaks seldom line up like soldiers at attention. They have a low break even failure rate and decent average rise in a bull market, giving them a solid performance rank.

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For more information on this pattern, read Encyclopedia of Chart Patterns Second EditionEncyclopedia of Chart Patterns 2nd Edition book. pictured on the left, pages 765 to 778.

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Score your pattern
for performance

Triple bottom chart pattern

Triple Bottom Chart Pattern

Triple Bottoms: Important Bull Market Results

Overall performance rank (1 is best): 7 out of 23
Break even failure rate: 4%
Average rise: 37%
Throwback rate: 64%
Percentage meeting price target: 64%

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

Triple Bottoms: Identification Guidelines

CharacteristicDiscussion
Price trendDownward leading to the pattern but should not drop below the first bottom.
ShapeThree distinct valleys that look similar.
Bottom priceThe price variation between bottoms is small such that it appears the three valleys bottom near the same price. Allow variations.
ConfirmationThe pattern confirms as a true triple bottom once price closes above the highest peak between the valleys.
VolumeUsually higher on the first bottom than on the last, trending downward 67% of the time, but it may peak beneath each valley.
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Triple Bottoms: Trading Tips

Trading TacticExplanation
Measure ruleCompute the height from the highest peak (point A in The Measure Rule figure to the right) to the lowest valley in the pattern (B) then multiply it by the above “percentage meeting price target.” Add the result to the breakout price (the highest peak in the pattern, A) to get the target, C.
Big WLook for a triple bottom with a tall left side, one with a steep decline and few or no price consolidations along the way. Expect price to return to near where the downtrend began.
ConfirmationWait for confirmation – price to close above the peak between the valleys (point A in the Measure Rule figure to the upper right). Triples are rare, so price often continues down without confirming the triple bottom.
RiseIf the rise between the first two bottoms is higher than the rise between bottoms 2 and 3, draw a down-sloping trendline connecting the tops. When price crosses this trendline, buy. The Trendline figure to the right shows an example.
Flat baseExpect a large rise if the triple bottom appears after a long, flat base. Use the weekly scale to find the flat base – the triple bottom will look like a pothole in a road. The Flat Base figure to the right shows an example.
MMUsTriple bottoms can appear as the corrective phase of a measured move up. The breakout move may be less than you expect.
Up trendAvoid triple bottoms that appear after an extensive up trend. The breakout is apt to result in a disappointing move.
DeclinesTriple bottoms with short-term (less than 3 months) decline leading to the pattern perform best post breakout.
PeakIf a triple bottom appears after a peak, the post breakout rise is apt to stall at the peak.
ShelfA third bottom that appears flat tends to support prices. When price rises above the top of this shelf, buy. The Shelf figure to the right shows an example.
Last valleyIf the last valley bottom is above the second valley bottom, then expect better performance. The Shelf figure shows an example of this when bottom B is above bottom A.
ThrowbacksThrowbacks hurt post breakout performance.
Triple bottom measure rule
The Measure Rule

 

Triple bottom trendline play

Trendline

 

Triple bottom flat base

Flat Base

 

Triple bottom shelf

Shelf

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Triple Bottoms: Example

Triple bottom chart pattern example

The above figure shows an example of a triple bottom chart pattern. The three bottoms (1 , 2 and 3) are at nearly the same price. Although bottom 3 appears to be well above the other two, the price scale suggests they are close to each other. The green confirmation line shows where the three bottom chart pattern becomes a true triple bottom.

-- Thomas Bulkowski

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See Also

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. I didn't fight my way to the top of the food chain to be a vegetarian.